A former 32-year FBI employee and his wife have pleaded guilty in federal court in San Francisco to bank fraud in which they overstated their income to acquire rental properties. The former FBI employee also admitted to making false statements and failing to disclose interest in these properties in order to keep his top-secret security clearance. Charles and Jeannette Espinel both admitted in their separate plea agreements that, beginning in 2006 and continuing through 2010, the two of them defrauded First California Bank and Wells Fargo Bank in connection with mortgage loans they obtained to purchase a $750,000 rental property in Daly City, Calif., and a $600,000 rental property in San Bruno, Calif., according to a release from United States Attorney Melinda Haag. The Espinels admitted that they purchased these rental properties by jointly submitting to banks in June 2006 and April 2007 fraudulent mortgage loan applications in which they knowingly overstated their incomes and falsely claimed that it was their intention to occupy the rental properties as their primary residence, according to the release. The Espinels also admitted that they subsequently obtained favorable modifications to these loans through fraud, including submitting false individual income tax returns which they had altered. The Espinels both admitted in their plea agreements that the total loss from their bank fraud was over $83,000. Charles Espinel in his plea agreement further admitted that from May 1979 until February 2012, he worked as a Support Services Technician in the San Francisco Division of the Federal Bureau of Investigation (FBI). Espinel’s professional responsibilities as a FBI Support Services Technician included records and file management technical support, telecommunications and investigative automation support, office management support and operations security support. As an FBI employee with top-secret clearance as well as access to sensitive information, Espinel was required annually to file a security financial disclosure form (SFDF) disclosing certain financial information (including listing all assets and liabilities). Espinel knew that his FBI supervisors and the FBI Security Division/Internal Security Section would review the financial information on his SFDFs to assess whether he had personal financial problems that might threaten his continued suitability for a top secret security clearance. Espinel admitted that he knew that lying on his SFDFs about his bank accounts and owned real estate would be significant issues of concern for FBI management. Espinel admitted in his plea agreement that in 2007, 2008, 2009 and 2010, he knowingly submitted to the Security Division/Internal Security Section of the FBI SFDFs in which he made several false statements and material omissions. Espinel admitted that he knowingly failed to disclose on those SFDFs his wife’s income and the real estate properties he owned or the rental income he was receiving from those properties. Charles Espinel, 61, and Jeannette Espinel, 58, of Daly City, were charged June 3, 2014, with one count of bank fraud. The maximum penalty for bank fraud is 30 years and a $1 million fine. The Espinels’ sentencing is scheduled for Nov. 12, 2014, before Judgee Charles R. Breyer, United States District Court Judge, in San Francisco. Assistant U.S. Attorney Joseph Fazioli is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the United States Department of Justice Office of the Inspector General. You can read the press release from the U.S. Attorney here. Click here to see the legal documents on the case from the U.S. Attorney. Here is the story from the San Francisco Chronicle.
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